WHAT VOLUNTEERS CONTRIBUTE:
Calculating and Communicating Value Added
Jack Quarter
OISE / University of Toronto
Laurie Mook
OISE / University of Toronto
Betty Jane Richmond
OISE / University of Toronto
WHAT VOLUNTEERS CONTRIBUTE:
Calculating and Communicating Value Added
Jack Quarter
OISE / University of Toronto
Laurie Mook
OISE / University of Toronto
Betty Jane Richmond
OISE / University of Toronto
© 2002 Canadian Centre for Philanthropy
Copyright for International Year of Volunteers materials is
waived for charitable and voluntary organizations for noncommercial use. All charitable and voluntary organizations
are encouraged to copy and distribute any and all IYV
publications.
The Community Engagement Division of Human
Resources Development Canada (HRDC) provided
financial support to this project. The views expressed in
this publication do not necessarily reflect those of HRDC,
the Canadian Centre for Philanthropy, or Volunteer Canada.
For more information on the International Year of
Volunteers, visit www.nonprofitscan.ca.
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Canadian Centre for Philanthropy
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ISBN# 1-55401-035-7
What Volunteers Contribute
WHAT VOLUNTEERS CONTRIBUTE:
Calculating and Communicating Value Added
2
What is Value Added?
Does value added apply to voluntary organizations?
What is Expanded Value Added?
3
3
3
Step 1: Gathering the Information you Need
A) Volunteer tasks and hours
B) Volunteers’ non-reimbursed out-of-pocket expenses
C) Estimated value of skills received by volunteers
D) Audited financial statements
4
4
5
5
5
Step 2: Assign a Dollar Value to your Volunteers’ Contributions
A) Calculate the dollar value of volunteer hours
B) Calculate non-reimbursed out-of-pocket expenses
C) Calculate the dollar value of volunteer skill development
7
7
8
8
Table of Contents
Introduction
Step 3: Putting it all Together
Calculating your Expanded Value Added Statement
A) Dollar value of the direct service you provide
(Primary Financial Outputs)
B) Dollar value of volunteer hours and non-reimbursed
volunteer expenses (Primary Social Outputs)
C) Sum of the total value of the services provided by your
organization and the total value contributed by your
volunteers (Primary Outputs Combined)
D) Dollar value of training volunteers (Secondary Financial Outputs)
E) Net dollar value of volunteer skill development
(Secondary Contributions)
F) Sum of the total dollar value of volunteer training and the
net dollar value of volunteer skill development
(Secondary Outputs Combined)
G – I) Total Outputs
J) Total purchases of external goods and services
K – P) Result: Expanded Value Added Statement
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11
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12
12
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12
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Continued on next page
What Volunteers Contribute
Continued from previous page
14
Appendix: Worksheet
15
References
16
Table of Contents
Step 4: Using an Expanded Value Added Statement to
Demonstrate your Organization’s Volunteer Value Added
What Volunteers Contribute
What volunteers contribute
WHAT VOLUNTEERS CONTRIBUTE:
Calculating and Communicating Value Added
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2
Introduction
Voluntary
organizations,
particularly those that depend on
donations and government
funding, are often viewed as
users of the resources of others
rather than as creators of value.
This is reflected on traditional
financial statements, which show
how organizations spend the
money that others give to them.
But voluntary effort is key to the
functioning of voluntary
organizations.
Voluntary
organizations are able to provide
programs and services largely
because of the unpaid efforts of
volunteers who sit on boards of
directors and committees, and
who provide direct services,
such as coaching and organizing
fundraising activities, mentoring
young people, working with the
elderly, and delivering meals.
The non-financial contributions
of these volunteers are not
captured on traditional financial
statements.
Voluntary organizations can
demonstrate the value added by
volunteers by using an
Expanded Value Added
Statement (EVAS). This type of
statement shows how voluntary
organizations use resources,
including volunteer resources, to
generate value.
How nonprofit
organizations can use the
information from their
Expanded Value Added
Statement:
V
„ in annual reports, to more
accurately reflect to supporters,
members, donors, and other
audiences the value the organization returns to
the community;
„ in
volunteer recognition programs, to
demonstrate to volunteers their true value to the
organization and to those served by the
organization;
„ in funding proposals and in reports to funders,
to show how the impact of funder dollars is
stretched by voluntary effort; and,
„ to demonstrate to policy-makers the value of
investing in community-based voluntary
organizations.
This manual will show readers how to develop and use an
Expanded Value Added Statement. Specifically, it will
explain:
„ value added and how it applies to voluntary
organizations;
„ the information needed to create a value added
statement;
„ the steps in creating an Expanded Value Added
Statement that includes the value of volunteers; and,
„ how this information demonstrates the value that
voluntary organizations add to the community.
Throughout, we will use the example of the Canadian Red
Cross, Toronto Region.
What is Value Added?
Value added is an indicator of organizational
performance. It measures the wealth that an
organization, typically a business, creates by
“adding value” to raw materials, products, and
services through the use of labour and capital. For
example, a company that manufactures furniture
first purchases raw materials such as wood and
upholstery fabric. It then transforms those
materials into furniture through the labour of its
workers and the resources of its factory. The value
added is the revenue that flows back into the
organization from the sale of the finished furniture,
minus the costs of external goods and services.
Does value added apply to
voluntary organizations?
Voluntary organizations also add value to
purchased materials, products, and services. For
example, a community-based meal delivery
program purchases groceries and uses them to
prepare meals, which it then delivers to clients.
Unlike businesses, however, voluntary
organizations rely on volunteers to generate part
of this value.
The accounting profession has recognized the
need for some way to report the contribution of
volunteers. As early as 1980, the Canadian
Institute of Chartered Accountants stated that it
is appropriate to recognize volunteer contributions
within accounting statements, particularly if the
services provided by volunteers are essential and
would be paid for if not provided by volunteers
(Canadian Institute of Chartered Accountants,
1980). However, the contribution of volunteers
is usually ignored on financial statements. At best,
this information appears in a footnote.
The problem in adapting the concept of value
added to voluntary organizations is that, while
volunteers generate part of the value of the
organization, the contributions of volunteers do
not usually involve financial transactions and do
not, therefore, show up on financial statements.
However, by using the concept of an Expanded
Value Added statement, voluntary organizations
can calculate the value added by their volunteers.
What is Expanded Value Added?
Expanded Value Added expands on value added
by including values for social (i.e., non-financial)
contributions such as the non-paid efforts of
volunteers. It is based on the premise that many
stakeholders, including volunteers, add value. It
can be used by voluntary organizations to
demonstrate their value added.
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What Volunteers Contribute
Step 1: Gathering the Information you Need
To calculate the value added contributed by your
volunteers, you first need to gather some key
pieces of information.
A) Volunteer tasks and hours
The first step in determining volunteer value added
is to calculate the number of volunteer hours
contributed to your organization for the fiscal year
(the year covered by your audited financial
statements).
If your organization uses volunteers in only one
or two roles (e.g., to serve on your board of
directors or provide a particular service), you will
find it easy to gather this information.
But many nonprofit organizations involve
volunteers in a variety of roles. If this is the case
for your organization, you will have to set up more
detailed record-keeping procedures in order to
produce an Expanded Value Added Statement.
This can be done on a computer, using a simple
spreadsheet program or specialized volunteer
management software.
If computer tracking of this information is beyond
the means of your organization, don’t despair. You
can keep track of the information you need on paper.
What information should you gather?
To prepare for your value added calculation, you
need to gather the following information:
„ the tasks performed by volunteers in your
organization (e.g., sitting on the board of
directors, sitting on a fundraising
committee, providing office administrative
support, delivering meals in the community,
counselling clients, doing friendly visiting,
planting trees, mentoring a child, disaster
relief, etc.);
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4
the number of volunteers who perform each
task;
„ the number of hours each volunteer
contributes to each task;
„ the number of hours each volunteer spends
preparing for his or her volunteer activities
(e.g., reading documents, preparing reports,
training for a special event); and,
„ the number of hours each volunteer spends
travelling to and from volunteer activities.
„
These last two items may not seem very important
at first glance, but without preparation and travel
time, many volunteers would be unable to fulfil
their roles. And the time spent on these items is
time freely given by volunteers.
There are two ways to gather this information:
„ you can have the staff (or volunteers)
responsible for volunteers in your
organization collect this information
regularly throughout the year and prepare
monthly reports; or,
„ you can ask volunteers to fill out a
questionnaire once a year.
The first option is preferable. While volunteers
may find it easy to report on what tasks they
performed during the year, they may have more
trouble remembering the precise number of hours
they spent. It is better to collect this information
on an ongoing basis, so that there is little room
for error.
However you choose to collect this information,
be sure to collect it for the same period that is
covered by your financial statements (i.e., for your
regular fiscal year).
B) Volunteers’ non-reimbursed out-ofpocket expenses
Next, collect information on the out-of-pocket
expenses your volunteers incur while fulfilling
their volunteer roles. Typically, organizations
reimburse some types of out-of-pocket expenses
incurred by volunteers (e.g., travel expenses,
meals, uniforms, and Internet connections). Other
expenses are not usually reimbursed or not
claimed for reimbursement (e.g., babysitting
expenses and parking). Out-of-pocket expenses
that are not reimbursed represent a type of value
that volunteers contribute to the organization.
to society. Gather information on the skills your
volunteers have acquired as a result of
volunteering with your organization. Skills could
include:
„ fundraising skills;
„ interpersonal skills;
„ technical or office skills; and,
„ communications skills.
It is important to differentiate between expenses
that are reimbursed and those that are not.
Expenses that are reimbursed do not count as
volunteer contributions. In some cases, expenses
may be partially reimbursed. In these instances,
the non-reimbursed portion would be considered
out-of-pocket.
Typically, incorporated nonprofit organizations
have their financial statements produced by an
accountant, and commission an independent audit
of those statements. The financial information in
the statements such as revenues, purchases,
salaries, and expenses for training is used to
produce an Expanded Value Added Statement.
C) Estimated value of skills received by
volunteers
Volunteers often learn skills from their volunteer
experiences. These skills have value to them, to
the organizations for which they volunteer, and
Unincorporated organizations might not have a
formal audit but can use internally produced
financial records to develop an Expanded Value
Added Statement.
D) Audited financial statements
Finally, get a copy of your organization’s most
recent audited financial statements.
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What Volunteers Contribute
Sample Questions to ask Volunteers
„ Please list the volunteer activities you undertook for our organization during the past year (e.g.,
sitting on the board of directors, sitting on a fundraising committee, providing office administrative
support, delivering meals in the community, counseling clients, doing friendly visiting, planting
trees, mentoring a child, disaster relief, etc.).
_____________________________________________________________________________
_____________________________________________________________________________
„ For each of these volunteer roles, please estimate the number of hours you spent volunteering in
the past year. _______________________
„ Please estimate the number of hours you spent preparing for your volunteer activities (e.g., reading
documents, preparing reports, training for a special event) in the past year.
_____________________________________________________________________________
„ Please estimate the number of hours you spent travelling to and from your volunteer activities in
the past year. _______________________
„ Did you spend any money out of your own pocket to do your volunteer work with our organization
in the past year?
‰ No
‰ Yes
If you spent money out of your own pocket to do your volunteer tasks, please use the chart below to
record how this money was spent, and whether or not you were given any money back from the
organization to cover your expenses.
Type of Expense
Amount of money spent
Regular/ongoing
Once in awhile
Amount paid back to you
By our organization
By your place
of employment
Travel while performing volunteer activities
$
$
$
$
Travel/bus fare to volunteer site
Meals/food/coffee
Phone/long-distance
Resource materials/supplies
Parking
Photocopying/printing
Internet time
Daycare
Volunteer uniform
Other, please specify:
Have your volunteer activities at our organization provided you with any of the following skills or areas of
knowledge? Please check all that apply.
‰ Fundraising skills
‰ Interpersonal skills (e.g., to understand people
better, to motivate them, to deal with difficult
‰ Communication skills (e.g., public speaking,
situations, etc.)
writing, public relations, conducting meetings,
etc.)
‰ Advocacy skills (e.g., speaking out on an
issue, writing a letter to the government, etc.)
‰ Technical or office skills (e.g., first aid skills,
coaching techniques, how to use a word
‰ Increased knowledge (e.g., regarding health,
processor, how to file books in a library, etc.)
women’s issues, political issues, criminal
justice, the environment, etc.)
‰ Organizational/managerial skills (e.g., how to
organize resources, to manage the work of
‰ Some other skill or knowledge, please specify:
others, to be a leader, to plan, to run an
___________________________________
organization, etc.)
___________________________________
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Step 2: Assign a Dollar Value to your Volunteers’ Contributions
The next step in your calculation is to assign a
dollar value to the contributions of your
volunteers.
economic activity. Some of the more common
industry classifications and wage rates are listed
in Table 1.
A) Calculate the dollar value
of volunteer hours
First, take the information you have gathered on
the number of volunteer hours contributed to your
organization during the fiscal year covered by your
audited financial statements and the number of
hours spent in total on each task.
Average hourly earnings
The average hourly earnings presented in Table 1
are calculated based on the North American
Industry Classification System (NAICS) which
was developed by the statistical agencies of
Canada, Mexico and the United States. NAICS
data are collected by Statistics Canada and can be
found in the Canadian Socio-Economic
Information and Management Database
(CANSIM). 1 A manual listing the various
classifications can be found on the Statistics
Canada Web site.2
Second, assign a dollar value to each task. You
can do this by using Statistics Canada wage rates,
which are based on the North American Industry
Classification System (NAICS). This system
classifies organizations (such as businesses,
government institutions, unions, and charitable
and nonprofit organizations) according to
1
2
Available online at http://www.statcan.ca/english/CANSIM.
Available online at http://www.statcan.ca/english/Subjects/
Standard/index.htm.
Table 1
Average hourly earnings in Ontario, 2000
Employees paid by the
hour, excluding overtime
Salaried employees,
excluding overtime
Service producing industries
$15.35
$22.96
54
Professional, scientific and technical services
$20.06
$27.54
55
Management of companies and enteprises
$16.69
$24.24
561
Administrative and support services
$12.84
$20.01
6111-15
Educational services
$15.54
$25.74
6216
Home health care services
$13.24
$15.38
624
Social assistance
$13.51
$14.52
62144
Child daycare services
$12.89
$13.74
711
Performing arts, spectator sports
and related industries
$14.87
$19.98
813
Religious, grant-making, civic
professional and similar organizations
$14.70
$19.75
NAICS
Code
Industry or sector title
blank
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7
What Volunteers Contribute
The Canadian Red Cross, Toronto Region,
classified the activity of the majority of its
volunteers under the NAICS system as sub-sector
624, social assistance (see Table 1). This subsector includes organizations engaged primarily
in providing services directly to their clients, such
as individual and family services, food and
housing within the community, as well as
emergency and other forms of relief.
The NAICS classification combines all levels of
tasks for a class such as social assistance — from
executive to administrative — and gives an
average wage rate for all levels of occupations in
that category. For the period April 1, 1999 to
March 31, 2000, the hourly wage rate in sub-sector
624, social assistance, in Ontario was $14.33.3
The NAICS rates do not take into consideration
governance tasks performed by boards. The Red
Cross used a second source of wage rates to assign
a dollar value to the work of its board — Human
Resource Development Canada’s Labour Market
Indicators.4 Using this information, it assigned a
value of $40.24 an hour to the work of its board.
This represents a mid-point hourly wage for senior
managers of health, education, social and
community services, and membership
organizations (Standard Occupational Code
0014), as determined by Human Resources
Development Canada (HRDC) for the York
region.
Table 2 shows the total market value of the hours
contributed by core volunteers through specific
programs of the Canadian Red Cross, Toronto
Table 2
Region. The amounts were obtained by taking the
total hours contributed by volunteers within a
program and multiplying them by the appropriate
hourly rate from the NAICS.
B) Calculate non-reimbursed out-ofpocket expenses
Take the information you gathered on the nonreimbursed out-of-pocket expenses that volunteers
contribute in order to carry out their volunteer
activities. Calculate the total dollar amount.
The non-reimbursed expenses for the Canadian
Red Cross, Toronto Region, are shown in Table
3. The table shows the number of volunteers in
each program area, and the percentage of
volunteers within each program area who had
expenses. Although the average amount of
expenses per volunteer was not large, the total
amount of expenses was a sizable $98,218.
C) Calculate the dollar value of volunteer
skill development
Volunteers learn skills as a result of volunteering.
These skills can make them even more valuable
to the organizations with which they are involved.
There are two steps to this calculation.
First, using the information in Step 1C, calculate
what percentage of your volunteers derived
benefits and/or learned skills from their volunteer
activities.
When the Canadian Red Cross, Toronto Region,
surveyed its volunteers, it found out that 53% of
them felt that they had developed skills by
volunteering for the organization. This was used
as a benchmark for skills development. In other
words, the organization assumed that the
Calculating market value of volunteer hours contributed
3
Number of Hours
Board
Office
Programs
Total
Rate
Amount
1100
$40.24
$44,264
2206
$14.33
$31,612
60262
$14.33
$863,554
$939,430
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4
This figure comes from the CANSIM database, available online
at www.statcan.ca/english/CANSIM.
Available at http://lmi-imt.hrdc-drhc.gc.ca. A salary range was
not available for the greater Toronto region, so the salary range
for York region was used. The calculation is based on a 37.5
hour week for 52 weeks. An alternative method of assigning
value to the work of boards would be to use one of the NAICS
managerial or administrative categories.
calculation of skill development should be applied
to 53% of its 1506 core volunteers.
Second, assign a dollar value to the skill
development of your volunteers. How do you
assign a dollar value to “learned fundraising skills”
or “learned interpersonal skills”? As a
conservative estimate you can use the cost of a
personal growth course at a community college.
For example, the average cost of five different
personal growth courses at three community
colleges in Toronto in March 2002 was $151.50.
The Canadian Red Cross, Toronto Region, had
1506 core volunteers. It multiplied this number
by 0.5338 (for the 53.38% of its volunteers who
indicated that they had developed skills), and then
multiplied the product of that calculation by
$151.50 (the average cost of a personal
development course at a community college). This
gave a total dollar value of $121,791 for volunteer
skills development (see Table 4).
Table 3
Calculation of volunteer out-of-pocket expenses
Program Area
Average Amount per
Volunteer with Expenses
# of Volunteers
% with Expenses
Community services
772
40%
Disaster and emergency services
150
84%
$111.19
$13,956
Transportation
113
92%
$235.92
$24,438
21
33%
$163.26
$1,143
260
68%
$145.00
$25,582
Home healthcare and equipment
Meals on wheels
Finance and administration
Council
Other
Summer students
Total
$75.00
Totals
$23,160
2
50%
$105.00
$105
11
67%
$225.00
$1,650
67
75%
$163.26
$8,183
110
NA
NA
1506
0
$98,218
Table 4
Calculating volunteer skill development
Canadian Red Cross Toronto Region
for the year ended March 31, 2000
1,506
Total number of core volunteers
Percentage of respondents who indicated strongly
that they had developed skills by volunteering for
this organization
0.5338
Average cost of community college course for
personal growth and development
$151.50
Total value of volunteers skills development
$121,791
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What Volunteers Contribute
Step 3: Putting it all Together
Calculating your Expanded Value Added Statement
Your organization’s Financial Statement shows
one type of value: financial. It presents your
organization’s revenues (how much money it
brought in) and expenses (how much it spent).
Your organization’s Expanded Value Added
Statement will show a fuller picture because it
combines the financial and social contributions.
Financial contributions represent information
from audited financial statements only. This is
referred to as a Restricted Value Added.
Social contributions represent information about
non-monetary contributions for which a market
comparison is estimated — in this case, the value
added by volunteers.
Combined value represents the total value added
from the financial and the social contributions.
This is referred to as an Expanded Value Added
Statement (EVAS).
Table 5
Canadian Red Cross, Toronto Region — Expanded Value Added Statement
Financial
Social
Combined
Primary
A
$5,741,634
B
$1,037,648
C
$6,779,282
Secondary
D
$5,090
E
$116,701
F
$121,791
Total
G
$5,746,724
H
$1,154,349
I
$6,901,073
Purchases of external
goods and services
J
$2,934,207
Total Value Added
K
$2,812,517
L
$1,154,349
M
$3,966,866
Ratio of value added to purchases
N
0.96
O
0.39
P
1.35
Outputs
A The dollar value of direct services provided by the organization (e.g.,
delivering meals to seniors).
B The dollar value of volunteer hours.
C The dollar value of A and B combined.
D The dollar value of expenditures on volunteer training.
E The dollar value of volunteers’ personal growth and development,
less the organization’s expenditure on training.
F The dollar value of D and E combined.
G The dollar value of A plus D, representing the total financial outputs.
H The value of B plus E, representing total social value added.
I
The total of G plus H, representing the combined total of financial
and social outputs.
J The dollar value of all externally purchased goods and services.
K G minus J. Financial contributions to value added. This represents
information from audited financial statements only. This is referred
to as a Restricted Value Added.
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$2,934,207
L Social (i.e., volunteer) contributions to value added. This represents
information about non-monetary contributions for which a market
comparison is estimated — in this case, the value added by volunteers.
M The dollar value of K and L combined. This represents the total value
added from the financial and the social contributions. This is referred
to as an Expanded Value Added Statement (EVAS).
N K divided by J. For every dollar it spent on the purchase of goods and
services, the organization created an additional $0.96 cents in
restricted value added.
O L divided by J. For every dollar it spent on the purchase of goods and
services, volunteers created an additional $0.39 cents in value added.
P M divided by J. For every dollar it spent on the purchase of goods and
services, the organization and its volunteers created an additional
$1.35 in value added.
Financial information taken from the Canadian Red Cross, Toronto Region
for the fiscal year ending March 31, 2000
Primary outputs are direct results of your
organization’s activities in accomplishing its
mission. In other words, they are the direct services
it provides (e.g., providing meals to seniors). Total
primary outputs are derived by adding items on
the audited financial statements (shown in the
column labelled Financial) and volunteer
contributions (shown in the column labelled
Social).
Secondary outputs are the indirect results of your
organization’s activities (e.g., volunteer skill
development).
Table 5 (page 10) shows the value added created
by the Canadian Red Cross, Toronto Region,
during the fiscal year that ran from April 1, 1999,
to March 31, 2000. To assist you in doing these
calculations, a blank worksheet resembling Table
5 is included in the Appendix.
A Dollar value of the direct service you
provide (Primary Financial Outputs)
Your organization exists to provide programs or
services to the community or to a defined client
group. The first step in developing your Expanded
Value Added Statement is to assign a dollar amount
to this.
Determining the market value for the outputs of a
for-profit firm is relatively straightforward. It is
simply the amount of revenues received through
sales or, in other words, the amount people have
paid for those goods or services in the market.
However, for many nonprofit organizations,
revenues are not earned in the market. Therefore,
a method is needed to assign a comparative market
value to the organization’s outputs. Ideally, this
method would use the market value of similar
goods and services, but this may prove overly
complex. Therefore, a simpler approach is
suggested.
The expenditures on a nonprofit organization’s
financial statements can be taken as a measure of
the value of its outputs. So you can simply take
the amount of revenues on the financial statements
and adjust for any surplus or deficit. If your
organization has a surplus, deduct this from
revenues to arrive at the value of outputs. Similarly
if your organization has a deficit, add this to
revenues to arrive at the value of outputs.
Using this method, find the dollar value of the
direct service your organization provides. Enter
this into Primary Outputs under the Financial
column on the worksheet.
The Canadian Red Cross, Toronto Region gets a
total of $5,741,634 in revenue from all sources.
This represents its Primary Output in the Financial
column.
B Dollar value of volunteer hours and
non-reimbursed volunteer expenses
(Primary Social Outputs)
Add together the dollar values that you assigned
to the hours contributed by your volunteers and
their total non-reimbursed out-of-pocket expenses.
Enter that number into Primary Outputs under the
Social column on the worksheet.
The Canadian Red Cross, Toronto Region
assigned a dollar value of $939,430 to the hours
contributed by its volunteers. Total nonreimbursed out-of-pocket expenses were $98,218.
It added these two figures together to arrive at
Primary Social Outputs of $1,037,648.
C Sum of the total value of the services
provided by your organization and the
total value contributed by your
volunteers (Primary Outputs Combined)
Add together your Primary Financial Outputs and
Primary Social Outputs. Enter that number into
Primary Outputs under the Combined column on
the worksheet.
The Canadian Red Cross, Toronto Region
calculated Primary Financial Outputs of
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What Volunteers Contribute
$5,741,634 and Primary Social Outputs of
$1,037,648. Added together, this gives Combined
Primary Outputs of $6,779,282. In an Expanded
Value Added Statement, this amount represents
the Total Primary Outputs of the organization.
D Dollar value of training volunteers
(Secondary Financial Outputs)
Most volunteers receive some training or
orientation before they carry out their volunteer
activities. They may also learn skills informally
from their colleagues or from performing their
volunteer duties. Providing this training and
orientation could involve an expenditure of
resources by the organization (e.g., payments for
items such as manuals and other materials).These
expenses should be captured in a line on your
financial statements. Enter that number into
Secondary Outputs under the Financial column
on the worksheet.
The Canadian Red Cross, Toronto Region
allocated the item “training expended on
volunteers” on its financial statements as its
Secondary Financial Output. This amount, $5,090,
appears in the second row of the Financial column
of Table 5.
E Net dollar value of volunteer skill
development (Secondary Contributions)
Find the dollar figure that you calculated for
volunteer skill development (see Table 4). If your
organization spent money on volunteer training
— either staff time or the cost of training manuals
and materials — subtract that amount from the
dollar value you have just assigned to volunteer
skill development.
The Canadian Red Cross, Toronto Region, spent
$5,090 on volunteer training. It subtracted this
from the $121,791 in Volunteer Skill
Development. The result, $116,701, is the
estimated market value of volunteer skill
development ($121,791 less the $5,090 expended
on training). Enter this amount into Secondary
Outputs under the Social column on the worksheet.
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F Sum of the total dollar value of
volunteer training and the net dollar
value of volunteer skill development
(Secondary Outputs Combined)
Add together the total dollar value of volunteer
training and the net dollar value of volunteer skill
development. Enter this amount into Secondary
Outputs under the Combined column on the
worksheet.
G H I Total Outputs
Add Primary and Secondary Outputs under each
column and enter the amounts in the Total row.
The Total of the Financial Outputs (G) of the
Canadian Red Cross, Toronto Region are
$5,746,724. These outputs involve financial
transactions only and represent the organization’s
total financial contribution to Primary Outputs
($5,741,634) and its total financial contribution
to Secondary Outputs ($5,090).
Its Total Social Contributions (H) are $1,154,349.
These contributions involve non-monetary
transactions and represent the estimated market
value of volunteer hours ($1,037,648) and
volunteer skill development ($116,701).
Its Combined Total Outputs (I) are $6,901,073.
This is the sum of its Total Financial Contributions
($6,779,282) and its Total Social Contributions
($121,791). This is the amount that it will report
on its Expanded Value Added Statement.
J Total purchases of external goods
and services
Value added is a measure of the wealth an
organization creates by “adding value” to raw
materials, products, and services through the use
of labour and capital. The Total Outputs represent
the value placed on an organization’s services.
However, to provide those services, organizations
have to purchase goods and services externally.
To arrive at the value added by labour and capital,
you must subtract the cost of these purchases from
Total Outputs.
The Canadian Red Cross, Toronto Region took
the cost of the goods and services that it purchased
externally ($2,934,207) from its audited financial
statements (see Table 6). In order to arrive at the
total purchases of external goods and services, it
subtracted the following items from its total
expenditures of $5,746,724: employee wages and
benefits ($2,608,957), volunteer training ($5,090),
volunteer recognition and awards ($8,515), and
amortization of capital assets ($189,955). The
remainder, $2,934,207, represents the net value
of externally-purchased goods and services.
Do this calculation for your organization and enter
the amount into box J on the worksheet.
K L M N O P Result: Expanded
Value Added Statement
You are now ready to calcluate your organization’s
Expanded Value Added Statement. This can be
expressed as a dollar amount or as a ratio of the
value of goods and services purchased externally
(N, O, P).
Financial contributions to value added:
According to the Financial column, the Canadian
Red Cross, Toronto Region’s Total Financial
Outputs were $5,476,724 and the organization
spent $2,934.207 to purchase goods and services
externally. In other words, for every dollar it spent
on the purchase of goods and services, it created
an additional $0.96 cents in value added. To find
the financial contribution to value added, it
subtracted the latter amount from the former
amount. The result indicates that they created
$2,812,517 in value added.
Social contributions to value added: According
to the Social column, the effort of the
organization’s volunteers created $1,154,349 in
value added. In other words, for every dollar it
spent on the purchase of goods and services, it
created an additional $0.39 cents in value added.
Combined (Expanded) value added: According
to the Combined column, the combined value
added of the organization (the total of the financial
and the social contributions) was $3,966,866. In
other words, for every dollar it spent on the
purchase of goods and services, the organization
and its volunteers created an additional $1.35 in
value added.
Table 6
Reconciliation of expenditures on audited financial
statements to purchases of external goods and services
on value added statement
Expenditures (Total Financial Outputs)
$5,746,724
Less:
$2,608,957
Employee Wages and Benefits
Volunteer Training
Volunteer Recognition and Awards
Amortization of Capital Assets
Purchases of External Goods and Services
$5,090
$8,515
$189,955
$2,934,207
You can take this calculation further by “distributing”
your value added, or showing the portion of the value
added received by each of your organization’s
stakeholders. For information on how to do this, see
What counts: Social accounting for nonprofits and
cooperatives (Quarter, Mook, & Richmond, 2002).
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What Volunteers Contribute
Step 4: Using an Expanded Value Added Statement to Demonstrate your
Organization’s Volunteer Value Added
Voluntary organizations, particularly those that
depend on donations and government funding, are
often viewed as users of others’ wealth rather than
as creators of additional wealth. Income
statements show how nonprofit organizations
spend the money that others give to them. But an
Expanded Value Added Statement paints a
different picture. It shows how a nonprofit
organization uses the resources it is given to
generate wealth.
If only the audited financial accounts were
considered, Canadian Red Cross, Toronto Region
appeared to create value added of $2,812,517 for
the year ending March 31, 2000.
The Expanded Value Added Statement shows that
the financial information without the social
contributions does not tell the organization’s
whole performance story. Including volunteer
Figure 1
Proportion of total activity hours by volunteers and staff
contributions in the calculation of value added led
to an increase of over 39 percent in value added.
In total, the Canadian Red Cross, Toronto Region,
generated $3,966,866 of value added or $1.35 for
every dollar of external purchases of goods and
services.
Information gathered to prepare an Expanded
Value Statement can also be used to show other
impacts of volunteer contributions.
For example, the core volunteers at the Red Cross,
Toronto Region contributed a total of 63,568
volunteer hours for the fiscal year ending March
31, 2000. Assuming a workweek of 37.5 hours,
this is equal to 32.6 full-time equivalent (FTE)
positions. This means that the Canadian Red
Cross, Toronto Region has a total FTE workforce
of 94.6, not just the paid staff FTE of 62.
Volunteers contributed over one-third of the total
activity hours associated with these 94.6 FTEs (see
Figure 1). These figures are significant when
considering issues related to managing the
equivalent of an additional 32 FTE positions.
Nonprofit organizations can use the information
from their Expanded Value Added Statement:
„ in annual reports, to present a picture of the
organization that may not appear in other
forms of financial statements;
„ in funding proposals, to help convince
potential funders that, for every dollar
invested, value added is generated; and,
„ in recognizing the contribution of
volunteers,to demonstrate the hard-dollar
value of their contribution.
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Appendix: Worksheet
Worksheet — Expanded Value Added Statement
Canadian Red Cross, Toronto Region — Expanded Value Added Statement
Financial
Outputs
Social
Combined
Primary
A
B
C
Secondary
D
E
F
Total
G
H
I
Purchases of external
goods and services
J
Total Value Added
K
L
M
Ratio of value added to purchases
N
O
P
A The dollar value of direct services provided by the organization (e.g.,
delivering meals to seniors).
B The dollar value of volunteer hours.
C The dollar value of A and B combined.
D The dollar value of expenditures on volunteer training.
E The dollar value of volunteers’ personal growth and development,
less the organization’s expenditure on training.
F The dollar value of D and E combined.
G The dollar value of A plus D, representing the total financial outputs.
H The value of B plus E, representing total social value added.
I
The total of G plus H, representing the combined total of financial
and social outputs.
J The dollar value of all externally purchased goods and services.
L Social (i.e., volunteer) contributions to value added. This represents
information about non-monetary contributions for which a market
comparison is estimated — in this case, the value added by volunteers.
M The dollar value of K and L combined. This represents the total value
added from the financial and the social contributions. This is referred
to as an Expanded Value Added Statement (EVAS).
N K divided by J. For every dollar it spent on the purchase of goods and
services, the organization created an additional $0.96 cents in
restricted value added.
O L divided by J. For every dollar it spent on the purchase of goods and
services, volunteers created an additional $0.39 cents in value added.
P M divided by J. For every dollar it spent on the purchase of goods and
services, the organization and its volunteers created an additional
$1.35 in value added.
K G minus J. Financial contributions to value added. This represents
information from audited financial statements only. This is referred
to as a Restricted Value Added.
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What Volunteers Contribute
References
Canadian Institute of Chartered Accountants. (1980). Financial reporting for non-profit organizations.
Toronto: Author.
Quarter, J., Mook, L., & Richmond, B.J. (2002). What counts: Social accounting for nonprofits and
cooperatives. Upper Saddle River, NJ: Prentice Hall.
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